In June, the Tax Court of New Jersey ruled that, with only narrow exceptions, Morristown Medical Center is not entitled to property tax exemption on most of its property in Morristown.

It’s one of several prominent cases involving property tax exemptions of large institutions that have attracted attention in the press and in legal and policy making circles. (Another closely watched case, involving Princeton University, is still making its way through the courts.) If you’re not among those paying attention, you might want to start.

Dollars and Sense

The property tax exemption is an essential part of the public/private compact between government and non-profits, an accommodation in exchange for the public benefit function that non-profits serve. For those organizations that do own property, the exemption is an essential way to stretch scarce resources in order to provide the programs and services for the public good.

As Center for Non-Profits surveys consistently document, demand for non-profit services continues to rise faster than the resources needed to provide them.

Meanwhile, it’s no secret that cash-strapped municipalities are leaving few stones unturned as they seek to fund their own budgets. With property tax caps and other policies limiting their options, it’s not surprising that they would look at non-profits.